Govt plans to bor­row Rs1.5tr from banks

The Pak Banker - - FRONT PAGE -

The gov­ern­ment in­tends to bor­row over Rs1.5 tril­lion be­tween Au­gust and Oc­to­ber, and most of the money would be bor­rowed through bank­ing sys­tem.

The State Bank is­sued the auc­tion cal­en­dar of Pak­istan In­vest­ment Bonds (PIBs) and Mar­ket Trea­sury Bills on Tues­day.

An amount of Rs1.425tr will be bor­rowed through Tbills auc­tion. In ad­di­tion to Rs1.207tr ma­tu­rity amount of the T- bills, the gov­ern­ment plans to bor­row Rs217 bil­lion from PIBs.

The gov­ern­ment has re­duced re­liance on PIBs and now T-bills are be­ing used for bor­row­ing.

The shift oc­curred dur­ing the last three months since growth in do­mes­tic debt ser­vic­ing in­creased by 13.3pc mainly be­cause of high-yield PIBs. The re­cent fall in in­ter­est rates re­duced the re­turn on PIBs, thus these bonds were no more at­trac­tive for banks. The coupon rate on three-year PIBs was cut to 8.75pc.

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